Traditional Retirement Plan vs Cash Balance Plan

[Riprorin]

I had a one-time option a few years ago of staying in the traditional retirement plan or switching to a cash balance plan. New employees have no choice; cash balance is the only option.

In retrospect, I probably should have given it more thought.

I decided to stay with traditional plan because I figured that anything they wanted to move me to wasn't in my best interest.

At the time, I had about 16 years with the company.

I'm planning on working at the company until retirement, but it's been a slow, steady decline. Don't know if I'll make it there the 17 years I need to retirement.

Not knowing all the facts and details, do you think I may have screwed up not going to cash balance?

 

[Riprorin]

^^

 

[dman]

Don't know--but--Probably not worth worrying about that since you can't change it anymore, I assume. Perhaps spend time preparing your marketable skills in case you need to find a new job.... and ride out the current job as long as possible.

 

[glenn1]

I won't get into the nitty-gritty details because they're not important, suffice it to say that the cash-balance plan starts off better, but gets overtaken by the traditional defined benefit plan over the intermediate to long term. It all depends on your plan provisions, but with 16 years service you're almost certainly past the tipover point.

The cash-balance plan is better for younger workers and those who think they're likely to switch employers or careers several times over their lifetime. The defined-benefit plan is far better for older workers and those who plan to be with their employer for the long term.

 

[Riprorin]

Thanks. that makes me feel better.

Employment has gone down from about 60,000 when I started to about 20,000 now.

I've been there 18.5 yrs now, and I'm making about 100K so it's tough to leave even though I question the long term prospects of the company.

Just hope I can hang until I get a decent pension.